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Coinbase’s New Layer 2 Network Base Attracts Scam Tokens

Photo for the Article - Coinbase's New Layer 2 Network Base Attracts Scam Tokens
  • Coinbase’s layer 2 blockchain, Base, has been opened to the public after initially being accessible only to developers since its launch five months ago.
  • With this public access, Base aims to expand its business by enabling public companies to use the blockchain for various purposes.
  • A report by Solidus reveals that over 500 fraudulent tokens worth $3.7 million in trading volume infiltrated the network, with scammers employing methods like liquidity withdrawal and coin minting to profit.

Five months after the prior launch of Base, Coinbase’s layer 2 blockchain, to developers only, it is now open to public companies. However, following its launch, a recent report by Solidus revealed that over 500 fraudulent tokens were in the network.

Scam Tokens in Base

The report states that the scam tokens in Base accumulated approximately $3.7 million in trading volume on the network’s decentralized exchanges. Additionally, the scammers executed at least $2.7 million in buys, $700,000 in sales, and $200,000 in wash sales, as of this writing.

Solidus also revealed that the scammers employed two methods to capitalize on their fraudulent endeavors: 

Firstly, they rapidly extracted all liquidity from their decentralized exchange (DEX) pairs after luring a significant number of users to invest, resulting in a substantial profit of $1.7 million. 

Alternatively, they create an excessive quantity of new coins using “minting” techniques, which they then sell, causing the DEX pair to deplete its Ether reserves and leading to a loss of $300,000 in value.

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“We encourage consumers to do their research diligently before participating in any dapp [decentralized application], on Base or any other chain, just as they would on the open internet,” a Solidus representative told Bloomberg.

Base Public Company Launch

According to the firm, public access to the Base has been open since August 10, 2023, at 12 a.m. (PH time). 

In an interview, Coinbase Head of Protocols Jesse Polak shared that as the firm is making a new effort to expand its business, public companies having access to the blockchain may help the firm manage and charge its own fees for transactions as well as earn through the software and services created by other developers on the network:

“We’re really focused on is increasing utility, which increases the number of use cases that folks can do through Coinbase and increases the opportunity for Coinbase to provide easy-to-use, trusted experiences that we can monetize. We’re not running the sequencer to make a bunch of profit. We’re running the sequencer to enable innovation.”

Consequently, Pollak shared that there are currently 100 decentralized apps that are ready for launch and are already deployed on the blockchain. 

Companies can utilize Base for various use cases. such as bridging tokens, transferring assets, and accessing the Wormhole bridging protocol. Moreover, it also supports DAO creation through Aragon and offers non-fungible token (NFT) minting.

To commemorate the launch, Coinbase has initiated an event called “Onchain Summer,” which is intended to demonstrate the potential of the Base network. 

The event is expected to promote the main net partner dApps in music, gaming, and digital art. Additionally, users are able to mint a “Base Day One” NFT to commemorate the arrival.

The event will be a celebration of the launch of the main net and will feature dApps in music, gaming, and digital art. Additionally, users will be able to mint a commemorative “Base Day One” NFT.

What is Base?

On February 23, 2023, Coinbase launched Base, an Ethereum-based platform that uses the Optimism layer-2 solution, positioning itself as a secure, cost-effective, and user-friendly platform for developing decentralized applications (dApps).

Moreover, it claims to serve as a foundation for both Coinbase’s in-house products and an inclusive environment for external developers.

According to Coinbase, the platform’s advantages include incorporating Ethereum’s security and expertise, while also offering interoperability with prominent Layer 1 blockchains like Solana and various Ethereum networks. It can tap into Coinbase’s product integrations, user-friendly fiat gateways, and robust acquisition tools. 

Prior to the public launch, the builders Infura, Gelato, HopProtocol, and Blockdaemon were already on the blockchain. 

Recent News on Coinbase

Last June, the Securities and Exchange Commission of the United States (U.S. SEC) filed a lawsuit against cryptocurrency exchange giants Binance and Coinbase. 

Subsequently, the Philippine-based think tank Infrawatch PH wrote a letter to regulators, such as the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC), urging the banning of the exchanges in the country. The local crypto community expressed varied responses to its actions.

Coinbase filed a petition with the SEC nine months ago, asking the regulator to develop and implement rules for digital assets. Last April, before the SEC investigation, Coinbase appealed to the federal court to intervene and urge the SEC to provide more explicit regulations on cryptocurrency.

This article is published on BitPinas: Public Companies Can Now Access Coinbase’s Layer 2 Network

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.

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